Correlation Between Now Corp and Greater Cannabis
Can any of the company-specific risk be diversified away by investing in both Now Corp and Greater Cannabis at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Now Corp and Greater Cannabis into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Now Corp and Greater Cannabis, you can compare the effects of market volatilities on Now Corp and Greater Cannabis and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Now Corp with a short position of Greater Cannabis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Now Corp and Greater Cannabis.
Diversification Opportunities for Now Corp and Greater Cannabis
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Now and Greater is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Now Corp and Greater Cannabis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greater Cannabis and Now Corp is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Now Corp are associated (or correlated) with Greater Cannabis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greater Cannabis has no effect on the direction of Now Corp i.e., Now Corp and Greater Cannabis go up and down completely randomly.
Pair Corralation between Now Corp and Greater Cannabis
Given the investment horizon of 90 days Now Corp is expected to generate 11.96 times more return on investment than Greater Cannabis. However, Now Corp is 11.96 times more volatile than Greater Cannabis. It trades about 0.17 of its potential returns per unit of risk. Greater Cannabis is currently generating about 0.07 per unit of risk. If you would invest 0.01 in Now Corp on October 23, 2024 and sell it today you would earn a total of 0.01 from holding Now Corp or generate 100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Now Corp vs. Greater Cannabis
Performance |
| Timeline |
| Now Corp |
| Greater Cannabis |
Now Corp and Greater Cannabis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Now Corp and Greater Cannabis
The main advantage of trading using opposite Now Corp and Greater Cannabis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Now Corp position performs unexpectedly, Greater Cannabis can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Greater Cannabis will offset losses from the drop in Greater Cannabis' long position.| Now Corp vs. Scepter Holdings | Now Corp vs. SponsorsOne | Now Corp vs. Vg Life Sciences | Now Corp vs. FDCTech |
| Greater Cannabis vs. Universal Systems | Greater Cannabis vs. AAP Inc | Greater Cannabis vs. Aquagold International | Greater Cannabis vs. High Yield Municipal Fund |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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